City Will Owe Billions by 2011

According to recent reports the city of New York will owe over $5 billion by the year 2011.

By: Eric Grinberg

The economic downturn of 2008 is having a more widespread effect than simply the mortgage market. Because of decreasing revenue, income from business taxes are dropping as well. Because the city will be unable to collect as much revenue from business as it has in past years, the next fiscal year is expect to see a budget shortfall of $2.3 billion. This is only the beginning, according the the Hartford Courant, which notes that by fiscal year 2011, the deficit could reach over $5 billion.

Mayor Bloomberg, in an attempt to explain the deficit, said that even if he removes the tax cut approved last year, the budget deficit will still exceed the $5 billion dollar mark by 2011. He also said that the city should prepare for the future by cutting the city's spending by 5.6 percent and delaying new expenditures. Bloomberg believes that only by cutting expenditures can the budget deficit be kept under control and that a balaced budget is the only way to move forward.

Mayor Bloomberg further said during a meeting with the committee that oversees the city's finances that, “...we'll have to keep a close eye on the economic indicators and take whatever steps are necessary to keep our budget for fiscal year 2009 in balance and keep our city moving forward.” Tom DiNapoli, State Comptroller, has released his own report detailing the financial impact that Wall Street's losses, which topped $22.4 billion in the first quarter of 2008, will have on the city's financial future.